Money going to mobile video ads more than doubled in Q2

Advertisers are putting nearly all of their dollars into in-app ads, ignoring the mobile Web

There's no question that ad spending on digital and mobile video is starting to shoot up, and that this is only the beginning of the trend. It is speculated that the total amount spent on these ads will reach $9 million in 2017, up from just $5.6 million in 2017. It is then poised to see double-digits annually through 2020, reaching $16.69 million.

The report, which analyzed over 1.5 trillion ad impressions, found that spending on mobile video ads went up by 142 percent just from the first quarter of this year alone. From Q4 2016 to Q1 2017, spending only rose 14 percent, meaning the growth rate went up by over 900 percent.

The quarter-to-quarter growth was even higher for what the company calls "rewarded video," which is exactly what it sounds like: people watch videos and they get some kind of reward back for it. That format saw ad impressions grow 96 percent and ad spending go up 153 percent quarter-to-quarter. Not surprisingly, these ads do very well in games, where users are looking for rewards.

By comparison, native advertising only rose 50 percent in the same time period.

Smaato also looked at which video ad formats worked best, and found that nearly two-thirds of video ad spending were on full screen ads, while only a quarter was spend on ads that took up only part of a screen.

This makes sense, as its harder to ignore an ad that takes up your entire screen, and so it leads to more views and more engagement.

The death of the mobile web

With the knowledge that full screen video is the most popular ad format on mobile, and the one that is most likely to get people to notice and engage with an ad, the next question is: where should that ad be placed?

There are two options on mobile: either in-app or the mobile Web. One of those formats is winning easily and is growing.

Ad spending in-app has grown from 75 percent in Q2 2016 to 94 percent in the most recent quarter, a 25 percent increase in just a year.

The fall mobile Web ad spending was most pronounced in the Americas, where it went from 28 percent to a mere 3 percent in that time period. In Europe, the Middle East and Africa, it went from 17 percent to 5 percent, and in the Asia-Pacific region the drop was relatively small, 20 percent to 15 percent.

Only two countries have less than 90 percent of mobile ad spending on apps: Japan, with 71 percent, and South Korea, with 69 percent.

There's a good reason for the money flow in-app: that's where the eyeballs are. In terms of time spent on each format, people spend seven of every eight minutes of their time-in app. By 2021, that number is expected to reach 3.5 trillion hours a year, double what it is now.